Great Southern, which collapsed in 2009, operated a number of forestry schemes that relied on Australian Taxation Office product rulings.
Investors who borrowed money from Bendigo Bank to invest in the Great Southern schemes argued they were misled by the collapsed firm when they took out their loans.
However, under the terms of the agreement, which is subject to court approval, participants in the class action will acknowledge their loans are valid and enforceable.
Investors will also agree not to undertake future litigation against the bank.
For its part, Bendigo Bank has agreed to waive unpaid interest relating to overdue amounts (beyond ordinary interest).
The waiver will not affect Bendigo Bank’s balance sheet, according to a statement by the bank.
Bendigo managing director Mike Hirst said the bank is entitled to be repaid its loans to Great Southern borrowers.
“We have always maintained that the bank’s conduct was at all times appropriate and the bank is entitled to be repaid its loans to Great Southern borrowers,” said Mr Hirst.
“The terms of this agreement endorse this position and we look forward to working with the borrowers as they repay their debts to us,” he said.
